year-end release 2016
5 year Tsr naV 31 deCeMBer 2016 1 year Tsr 16% seK 72.4Bn -6%
OPeraTInG COMPanIes’ PerFOrManCe InVesTMenT ManaGeMenT aCTIVITIes • Zalando had preliminary fourth quarter revenue growth • Kinnevik made investments of SEK 971m in the fourth of 25-26% and an EBIT margin of 7.5-9.5%. For the full quarter of 2016, whereof SEK 898m in Tele2’s SEK 3bn year, Zalando delivered preliminary revenue growth of rights issue fnancing the acquisition of TDC Sweden. 23% and an EBIT margin of 5.6-6.2%, in line with guid- Net investments amounted to SEK 872m in the quarter ance • Full-year investments of SEK 3.4bn, focused primarily • Millicom’s largest market Latin America reported cable on investments in existing companies. Net investments and mobile data revenue growth of 6% and 17% respec- amounted to SEK 2.8bn tively during the fourth quarter, and the adjusted EBITDA margin amounted to 36% for the group. Organic service revenues grew 1.2% for the full year 2016, with an FInanCIal POsITIOn adjusted EBITDA margin of 36% • Net Asset Value of SEK 72.4bn (SEK 263 per share) per • Tele2 grew fourth quarter revenues by 18% and achieved 31 December 2016 an EBITDA margin of 18% for the fourth quarter and - Down SEK 2bn, or 3%, since last quarter-end, driven 19% for the full year. Revenue growth for the full year by a SEK 1.9bn, or 3%, decrease in the value of the amounted to 5% listed investee companies • MTG reported an organic revenue growth of 8% and an - Down SEK 11bn, or 13%, for the full year 2016, EBIT margin of 11% for the fourth quarter. For the full whereof SEK 7.1bn was distributed to shareholders year, MTG had organic revenue growth of 5% and an • Net debt position of SEK 1.4bn per 31 December 2016, EBIT margin of 8% corresponding to 2% of portfolio value
reFIned reTurn and leVeraGe TarGeTs 2016 dIVIdend reCOMMendaTIOn • Attractive returns: Kinnevik’s objective is to generate a • Kinnevik’s Board of Directors recommends an ordinary long term total return to our shareholders in excess of dividend of SEK 8.00 per share for 2016, an increase of our cost of capital. We aim to deliver an annual total 3.2% from last year’s ordinary dividend (SEK 7.75 per shareholder return of 12-15% over the business cycle share), equivalent to a dividend yield of 3.7% • Low leverage: Given the nature of Kinnevik’s investments, • The Annual General Meeting will be held on 8 May 2017 our goal is to carry low leverage, not exceeding 10% of portfolio value
seKm 31 dec 2016 30 sep 2016 31 dec 2015 Net Asset Value 72 434 74 507 83 517 Net Asset Value per share, SEK 263.29 270.82 301.10 Share price, SEK 218.90 218.20 262.00 Net cash / (net debt) -1 367 -419 7 558
seKm Q4 2016 Q4 2015 Fy 2016 Fy 2015 Net proft/loss -2 082 1 366 -3 459 1 207 Net proft/loss per share, SEK -7.56 4.93 -12.55 4.35 Change in fair value of fnancial assets -1 955 1 449 -4 969 -1 537 Dividends received 17 - 1 733 2 984 Dividend paid - - 7 084 2 011 Investments 971 33 3 399 1 562 Divestments 99 7 633 563 8 298
Comparative fgures for the corresponding periods 2015 are restated due to a change to Investment Entity accounting in accordance with IFRS10, see further in Note 1.
KInneVIK aB (Publ) reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q 2016 2
ChIeF exeCuTIVe’s reVIew
Chief executive’s review
In 2016, Kinnevik combined a high level of investment activity with a signifcant cash return to our sharehold- ers. we added two new digital consumer-focused companies to our portfolio, Betterment and babylon, and invested in our existing companies to support their growth and proftability. We returned SEK 7.1bn to our shareholders through our ordinary dividend and a share redemption programme and, in addition, executed a SEK 500m share buyback programme. These actions refect the strength of our business model. We invest to build leading digital consumer brands, whilst maintaining our fnancial discipline and commitment to return value to our shareholders. footprint to reconfgure the revenue mix towards these high KInneVIK FOurTh QuarTer resulTs growth segments as voice and SMS revenues weaken further. During the fourth quarter of 2016, Kinnevik’s NAV decreased Second, enhancing operational effciency in order to refocus by 3% to SEK 72.4bn, or SEK 263 per share. The value of the cost structure. Millicom’s Board of Directors recommends our private assets was stable and amounted to SEK 12.3bn a dividend for 2016 of USD 2.64 per share. at year-end. Our share price increased slightly and ended Tele2 reported sales growth of 18% and an EBITDA margin of the quarter at SEK 219. On 9 February, Kinnevik’s NAV had 18% in the quarter, supported by increasingly strong mobile increased to SEK 78.2bn, or SEK 284 per share. momentum driven by 4G data monetisation across the group. The acquisition of TDC Sweden was completed in October 2016: FOCus On susTaInaBle Value CreaTIOn and the rights issue was fnalised shortly thereafter. Tele2’s At Kinnevik we build companies over the long term. This Board of Directors recommends a dividend for 2016 of SEK requires a focus on sustainability from fnancial, governance 5.23 per share. and corporate responsibility perspectives. During 2016, our MTG reported a fourth quarter organic sales growth of 8% larger private companies implemented clear guidelines for driving an operating margin of 11% further boosted by the governance, risk management, compliance and corporate company’s strategic cost transformation program. A strong responsibility. In addition, whilst frmly focused on maintain- content offering, including the best of sports such as the ing growth, an increased emphasis on operational effciency Olympics and UEFA Champions League, as well as new enabled our companies to improve proftability. The execu- original programming on Viaplay, ensured continued good tion of our investment strategy continued in a disciplined performance in the Nordic Entertainment part of the busi- and focused manner. 2016 involved re-allocations of capital ness. MTG’s Board of Directors recommends a dividend for within the existing portfolio but also net investments of almost 2016 of SEK 12.00 per share. SEK 3bn, including in particular our leading role in Global Fashion Group’s fnancing round and our participation in sharehOlder reMuneraTIOn Tele2’s rights issue fnancing their acquisition of TDC Sweden. and FInanCIal TarGeTs Zalando, Kinnevik’s largest asset, had a successful 2016. The In 2016, Kinnevik paid an ordinary dividend of SEK 7.75 per company continued to strike a good balance between growth share and executed a share redemption programme of SEK 18 and proftability, and pushed forward with investments to per share. Accordingly, the total shareholder remuneration develop its platform initiatives and further improve its of- during 2016 represented a record high dividend yield of 9.8% fering. Preliminary numbers for 2016 show a 23% revenue based on the closing price per 31 December 2015. Kinnevik growth for the year to EUR 3.6bn and an EBIT margin of also executed a SEK 500m share buyback programme. around 6%, which is in line with their guidance. The company continued to strengthen its market presence and expressed For the fscal year 2016, Kinnevik’s Board of Directors recom- intentions to open a satellite warehouse in Sweden during mends a dividend of SEK 8.00 per share, corresponding to a 2017 to further improve Zalando’s customer proposition in 3.7% dividend yield based on the closing price for 2016, to its important Nordic markets. be approved by the Annual General Meeting in May. Global Fashion Group strengthened its fnancial position in The Board has refned Kinnevik’s fnancial targets with re- 2016 by raising a EUR 330m funding round and by divesting spect to target returns and leverage, refecting the current operations in India, Thailand and Vietnam. GFG achieved sig- macroeconomic environment and the composition of Kin- nifcant margin improvements driven by improved inventory nevik’s portfolio. Kinnevik’s shareholder remuneration target management, meaningful effciency gains and path-to-proft remains unchanged. initiatives leading to fxed cost optimisation. GFG continues As acting CEO, and on behalf of the entire Kinnevik team, I to focus on the roll-out of marketplace platforms in addition would like to thank all of our shareholders for the support to securing key international brands. during 2016 and say that we look forward to a very interesting Millicom’s largest market Latin America grew cable revenues 2017. Kinnevik has a clear strategy and will continue to work by 6% and mobile data revenue by 17% in the quarter, and closely with our investee companies to drive innovation and the adjusted EBITDA margin for the group amounted to growth in order to deliver shareholder value. 36%. The company continued to execute on its strategy to reshape the business on two main focus areas. First, driv- Joakim Andersson ing rapid growth in mobile data and expanding the cable Acting Chief Executive Offcer, Chief Financial Offcer
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q 2016 3
KInneVIK In suMMary
Kinnevik in summary Kinnevik is an industry focused investment company with an entrepreneurial spirit at its heart. Our purpose is to build the digital consumer businesses that provide more and better choice. we do this by working in part- nership with talented founders and management teams to create, invest in and lead fast growing businesses in developed and emerging markets. we believe in delivering both shareholder and social value by building well governed companies that contribute positively to society. Kinnevik was founded in 1936 by the stenbeck, Klingspor and von horn families. Kinnevik’s shares are listed on nasdaq stockholm’s list for large cap companies under the ticker codes KInV a and KInV B.
InVesTMenT aCTIVITy POrTFOlIO deVelOPMenT
SEKm SEKbn
83.5
7.6 3 399 74.5 0.3 1.8 72.7 0.4 72.4 2.3 0.5 3.4 2.4 3.5 2 836 5.8 4.1 64.6 0.4 2.1 0.4 0.4 3.8 2.3 3.5 30.0 26.9 26.0
27.0 29.3 971 872
-99 40.5 41.9 40.8 -563 33.6 28.8 Q4 2016 Full year 2016
(0.4) (1.4) Investments Divestments Net Investments Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016
POrTFOlIO COMPOsITIOn POrTFOlIO reTurn raTes
-3% 3% 1% -7% 6% One QuarTer 20% 6%
-2% 55% One -12% year 26% 7%
26% FIVe 35% -3% years annualIZed -3% 20%
One and fve-year returns are annualized internal rates of return (IRR). The returns are based on fair values at the beginning and end of the respective period, includes cash and non-cash items and is calculated on a SEK gross basis.
E-Commerce & Marketplaces Communication Entertainment Financial Services Other Net Cash/(Debt)
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q 2016 4
neT asseT Value net asset Value
Fair value Fair value Fair value Total return seKm 2016 2016 2015 2016 1 31 dec 30 sep 31 dec
Zalando 27 245 27 992 25 943 5%
Global Fashion Group 5 641 5 668 4 067 2%
Rocket Internet 3 990 4 019 5 627 -29%
Qliro Group 367 507 513 -28%
Home & Living E-Commerce 2 551 582 1 250 -63%
Other E-Commerce 2 1 280 1 338 1 028 53%
Quikr 1 535 1 544 1 519 1%
Other Marketplaces 2 220 232 505 -59%
Total e-Commerce & Marketplaces 40 829 41 882 40 452 -2%
Millicom 14 790 16 856 18 479 -16%
Tele2 11 166 10 006 11 524 -5%
Total Communication 25 956 26 862 30 003 -12%
MTG 3 650 2 959 2 938 30%
Other 439 505 489 1%
Total entertainment 4 089 3 464 3 427 26%
Bayport 1 201 1 132 1 278 -6%
Betterment 590 557 - 10%
Other 2 649 626 501 21%
Total Financial services 2 440 2 315 1 779 7%
Other 487 403 298 15%
Portfolio Value 73 801 74 926 75 959 -4%
Net cash/debt -1 367 -419 7 558
whereof unpaid investments/divestments -49 -131 -62
Total net asset Value 72 434 74 507 83 517 -5%
Net Asset Value per share, SEK 263.29 270.82 301.10 -4%
Closing price, class B share, SEK 218.90 218.20 262.00 -6%
1 Includes investments, divestments and dividends. 2 For split see page 13.
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q 2016 5
e-COMMerCe & MarKeTPlaCes
e-Commerce & Marketplaces
Zalando is europe’s leading online fashion platform, Global Fashion Group is the leading emerging mar- offering clothing, shoes and accessories for women, kets fashion e-commerce company with operations men and children with more than 1,500 global and across 24 markets with a 1.9 billion population, ad- local brands as well as private labels. Zalando was dressing a fashion market estimated to be worth founded in 2008, has an online presence in 15 euro- EUR 300bn. The GFG companies, Lamoda, Dafti, pean markets and is tailored to country-specifc cus- namshi, Zalora and The Iconic, were founded in 2011 tomer preferences. and 2012.
• On 17 January, Zalando announced preliminary • GFG’s operating momentum was strong in the third results for the fourth quarter 2016, growing reve- quarter with improving margins across all regions. nues by 25-26% to EUR 1,086-1,094m Number of active customers grew by 20%, totaling • The company expects to achieve an adjusted 9.1 million, NMV growth amounted to 22% and net EBIT of EUR 81-104m in the fourth quarter, corre- revenue growth amounted to 16% in Q3 2016 sponding to a margin of 7.5-9.5% • Adjusted EBITDA margin amounted to -13%, an • Zalando delivered on its 2016 full-year guidance, improvement of 15 percentage points compared growing 22.9-23.1% and achieving an adjusted to Q3 2015, driven by improved inventory manage- EBIT margin of 5.6-6.2% for the full year ment, meaningful effciency gains and path-to- proft initiatives leading to fxed cost optimisation • The company intends to open a new satellite ware- house in Sweden during 2017, further improving • The successful closing of the EUR 330m funding its customer proposition in the important Nordic round in Q3 2016 and announced divestments in markets India, Thailand and Vietnam substantially strength- • Financial results for the full year 2016 will be ened GFG’s fnancial position with a pro forma published on 1 March 2017 cash balance of EUR 284m at the end of Q3
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32% seK 27.2Bn 35% seK 5.6Bn KInneVIK sTaKe FaIr Value KInneVIK sTaKe FaIr Value
19.2M 9.1M aCTIVe CusTOMers aCTIVe CusTOMers
Oct-dec Full year Jul-sep Jan-sep
Key data (eurm) 2016 2015 2016 2015 Key data (eurm) 2016 2015 2016 2015 Revenue 1 086 869 3 633 2 958 Revenue 250 197 706 558 % Growth 25% 31% 23% 34% % Growth 16% - 29% - EBIT 81 72 202 108 Gross proft 104 76 296 223 % Margin 8% 8% 6% 4% % Margin 41% 39% 42% 40% EBIT adjusted for share-based compensation. Fourth quarter and full year 2016 num- EBITDA -32 -54 -100 -175 bers are preliminary, fgures included in table represent bottom of preliminary range. % Margin -13% -27% -14% -31%
All fgures excludes Jabong. EBITDA adjusted for share-based compensation. Growth fgures in constant currencies and pro forma divested operations.
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q 2016 6
e-COMMerCe & MarKeTPlaCes
rocket Internet is a global internet platform that in- Qliro Group was founded in 1999 and is a leading cubates and develops e-commerce and other con- e-commerce group in the nordic region. Qliro Group sumer-oriented online companies. Founded in 2007, focuses its operations on three business areas: Mar- rocket Internet now has a network of companies in a ketplace, Fashion and Financial services. large number of countries across the globe.
• Rocket Internet’s larger portfolio companies • Qliro Group’s fourth quarter gross margin continued to grow revenues and reduce losses increased by 4.2 percentage points to 18.7%, on their path to proftability. Aggregate GMV primarily driven by Nelly’s focus on private label amounted to EUR 1.9bn and net revenues to and continued efforts with the assortment strategy, EUR 1.6bn during the frst nine months of 2016, a along with Qliro Financial Services’ continued growth of 35% and 31%, respectively increase in earnings • Aggregate adjusted EBITDA margin for the larger • The strategic review conducted during the end of portfolio companies amounted to -18% during the 2016 resulted in Qliro Group revising its strategic frst nine months of 2016, an improvement of 17 direction and adopting new long-term fnancial percentage points compared to the same period targets, with the ambition to secure and further 2015 strengthen its position as the leading Nordic player within the e-commerce segment • Rocket Internet and its companies continue to be well funded, with available cash of EUR 1.6bn at • As a result of the strategic review, the company has Rocket Internet and an additional EUR 1.1bn at the also made the decision to focus its operations on companies, as of the end of October 2016 the business areas Marketplace (CDON), Fashion (Nelly, NLY Man, Members) and Financial Services • Full year 2016 results for Rocket Internet and larger (Qliro Financial Services) portfolio companies will be published on 27 April 2017
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13% seK 4.0Bn 29% seK 367M KInneVIK sTaKe FaIr Value KInneVIK sTaKe FaIr Value
3.9M aCTIVe CusTOMers
Oct-dec Full year
Key data (seKm) 2016 2015 2016 2015 Net sales 1 523 1 488 4 469 4 431 % Growth 2% - 1% - Gross proft 285 216 787 679 % Margin 19% 15% 18% 15% EBITDA 48 6 18 -28 % Margin 3% 0% 0% -1%
Excluding items affecting comparability and discontinued operations.
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q 2016 7
e-COMMerCe & MarKeTPlaCes
home24 is an online store for furniture and home ac- westwing is an international home & living e- cessories in seven core markets in europe and Brazil. commerce company offering a curated selection of The broad range of around 100,000 products from home décor, interior design and furniture products. over 800 manufacturers includes furniture, lamps, westwing covers 14 markets across europe, Brazil home accessories and garden equipment. and russia.
• Active customers increased by 6% and totalled 1.0 • Active customers increased by 7% on a yearly million at the end of the third quarter 2016 basis and totalled 1.0 million at the end of the third quarter 2016. GMV increased by 27% and • Revenues amounted to EUR 54m during the third amounted to EUR 60m in the third quarter quarter, largely fat compared to the previous year, whilst proftability improved substantially from • Revenues increased by 23% in the third quarter an adjusted EBITDA margin of -35% in the third to EUR 56m and the adjusted EBITDA margin quarter 2015 to -17% in the third quarter 2016, an improved by 14 percentage points to -11% 18 percentage points improvement • Proftability continues to improve as a result of • Home24 acquired Returbo, a German e-commerce further automated processes, reduced logistics company that sells overstock and returns. The costs and focus on the most effcient marketing acquisition will allow Home24 to further optimise channels its return and recycling processes • Over half of Westwing’s revenue is now generated • The company opened its frst showroom in Vienna, through mobile purchases, a result of the compa- including professional furnishing consultants that ny’s focus on creating an easy to use, inspiring provide customers with individual tips and ideas. customer experience The offine presence enables Home24 to showcase its collections live and further extend its customer relationships
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17% seK 94M 17% seK 429M KInneVIK sTaKe FaIr Value KInneVIK sTaKe FaIr Value
1.0M 1.0M aCTIVe CusTOMers aCTIVe CusTOMers
Jul-sep Jan-sep Jul-sep Jan-sep
Key data (eurm) 2016 2015 2016 2015 Key data (eurm) 2016 2015 2016 2015 Net revenue 54 55 178 172 Net revenue 56 45 174 154 % Growth -1% 19% 3% 63% % Growth 23% -5% 13% 27% Gross proft 23 20 72 64 Gross proft 23 20 73 65 % Margin 42% 37% 41% 37% % Margin 41% 44% 42% 42% EBITDA -9 -19 -35 -56 EBITDA -6 -11 -16 -46 % Margin -17% -35% -20% -33% % Margin -11% -25% -9% -30%
EBITDA adjusted for share-based compensation. EBITDA adjusted for share-based compensation.
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q 2016 8
e-COMMerCe & MarKeTPlaCes
launched in 2012, linio is an online shopping and Konga was founded in 2012 and is one of the largest selling destination in spanish speaking latin america general merchandise marketplaces in nigeria, ranked with a presence in argentina, Chile, Colombia, Mexi- as one of the top 15 websites in the country. co, Peru and Venezuela.
• Linio ran a successful Black Friday campaign, with • The number of customers with more than four improved traffc and engagement from both new purchases increased by over 60% compared to the and existing customers across markets same period last year. Konga has primarily focused on improving operational effciency during the • The company’s new mobile app has been very well quarter received and has resulted in improved conversion rate and sales • Konga delivered an exceptional performance on Yakata (Nigeria’s Black Friday) and almost doubled GMV compared to last year
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27% seK 292M 34% seK 133M KInneVIK sTaKe FaIr Value KInneVIK sTaKe FaIr Value
Quikr is India’s number one online classifeds plat- saltside launched in 2011 and operates the top on- form. The company launched in 2008 and serves ap- line horizontal classifeds platform in four frontier proximately 20 million unique monthly visitors. markets - Bangladesh, sri lanka, Ghana and nigeria.
• Quikr’s platform generated 10.3 million responses • Saltside’s regional platforms generated 3.3 million in December 2016. Responses per listing increased responses in December, an increase of 27% by 125% compared to the same period last year compared to the same month last year • The company more than doubled its quarterly • The company more than doubled its quarterly revenue year-on-year, despite a broader macro- revenue compared to the same period last year, economic slowdown in November and December largely driven by strong growth in the number of following the move to demonetise high-value paying SMB membership packages currency in India • Saltside’s local websites continue to be able to • During the quarter, Quikr completed the acquisi- optimise marketing costs as a result of increasing tion of Grabhouse, a managed marketplace that market share and organic traffc provides standardised and branded accommoda- tion to young professionals
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18% seK 1.5Bn 61% seK 200M KInneVIK sTaKe FaIr Value KInneVIK sTaKe FaIr Value
10.3M 3.3M deCeMBer resPOnses deCeMBer resPOnses
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q 2016 9
COMMunICaTIOn
Communication
Millicom is a leading international telecommunica- Founded in 1986, Tele2 is one of europe’s leading tions and media company dedicated to emerging telecommunications operators offering mobile com- markets in latin america and africa since 1990. munication services, fxed broadband and telephony, Millicom strives to lead the development of innova- data network services and content services in 9 coun- tive and customer-centric digital lifestyle services. tries.
• In Latin America, Millicom’s largest market, cable • Mobile end-user service revenue grew by 6% on a revenue increased by 6.5% during the quarter like for like basis in the fourth quarter, supported driven by continued extension of the cable foot- by increasingly strong mobile momentum driven print to over 8.1 million homes, ahead of the full- by 4G data monetisation across the group year target, and mobile data revenue grew 17.5% • Strong fourth quarter EBITDA growth of 4% on a supported by increased smartphone data use like for like basis, despite continued investments in • Adjusted EBITDA margin strengthened to 35.5% in the Netherlands the fourth quarter, supported by operational eff- • The acquisition of TDC Sweden was completed on ciencies driving lower operating costs 31 October and integration is already underway • On 7 February, Millicom announced the sale of its with a number of key contracts retained Senegal business for USD 129m, in line with the • Tele2’s Board of Directors recommends a dividend strategy to focus on the development of advanced for 2016 of SEK 5.23 per share and expects to fxed and mobile data services propose a dividend for 2017 of SEK 4.00 per share • Millicom’s Board of Directors recommends a divi- dend for 2016 of USD 2.64 per share
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38% seK 14.8Bn 30% seK 11.2Bn KInneVIK sTaKe FaIr Value KInneVIK sTaKe FaIr Value 57M 15.6M MOBIle suBsCrIBers MOBIle suBsCrIBers
Oct-dec Full year Oct-dec Full year
Key data (usdm) 2016 2015 2016 2015 Key data (seKm) 2016 2015 2016 2015 Revenue 1 594 1 636 6 249 6 572 Revenue 8 217 6 943 28 292 26 856 % Growth -3% -10% -5% 5% % Growth 18% 1% 5% 3% EBITDA 566 549 2 225 2 227 EBITDA 1 459 1 337 5 334 5 757 % Margin 36% 34% 36% 34% % Margin 18% 19% 19% 21% EBIT 81 134 761 843 EBIT 526 602 2 071 2 890 % Margin 5% 8% 12% 13% % Margin 6% 9% 7% 11% Net proft/loss -143 -426 -32 -559 Net proft/loss –177 45 –2 164 1 268
Revenue, EBITDA and EBIT are based on full consolidation of Guatemala (55% owner- Figures refer to continuing operations excludes one-off items. TDC Sweden is included ship) and Honduras (66.7% ownership). EBITDA is adjusted for restructuring and inte- from 31 October 2016. gration costs and other one-off items.
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q 2016 10
enTerTaInMenT
entertainment Financial services
MTG is an international digital entertainment group. Bayport provides unsecured credit and other fnancial Its operations began in 1986, spans six continents services to the formally employed mass market in af- and include TV channels and online platforms, con- rica and latin america since 2001. tent production and distribution businesses, radio stations, multi-platform networks, esports and online • In 2016, Bayport’s core payroll customer base grew by 6.5% to 440,000, providing 10.5% loan book gaming. growth
• Organic sales grew by 8%, a fourth quarter sales • The new digital retail offering My Money continued record and a refection of MTG’s continued invest- its growth trajectory, surpassing 134,000 customers ments in product development, high quality • In Ghana, the company launched a tablet-based programming and improving the user experience loan origination tool with automated underwriting • EBIT was up 28% in the quarter despite currency capability for small unsecured loans (My Credit), headwinds and signifcant investments in content becoming the frst lender in Ghana with such capa- and MTG’s digital transformation. The increased bilities Go to company website > proftability was driven by organic growth and the strategic cost transformation program • MTG continued to progress its strategic portfolio 24% seK 1.2Bn realignment through the divestment of its Czech TV KInneVIK sTaKe FaIr Value assets and its free-TV businesses in Africa. Proceeds are intended to be used to increase MTG’s stake in previously acquired online gaming company Inno- 440 000 Games COre PayrOll CusTOMers • MTG’s Board of Directors proposes a dividend for 2016 of SEK 12.00 per share
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Milvik offers, under the brand name BIMa, afforda- 20% seK 3.7Bn ble and uniquely designed life and health insurance KInneVIK sTaKe FaIr Value products via mobile phones since 2010. BIMa is ac- tive across 16 markets in africa, asia, latin america and the Caribbean. 1.2M • At the end of the year, BIMA had 5.6 million active suBsCrIBers users, representing a yearly increase of 24% excluding discontinued products • BIMA continued to establish new strategic part- Oct-dec Full year nerships with leading mobile operators, enabling the company to expand its footprint in new and Key data (seKm) 2016 2015 2016 2015 existing markets, as well as accelerate growth
Revenue 5 019 4 545 17 299 16 218 Go to company website > % Growth 8% -0% 5% 1% EBIT 554 434 1 347 1 268 39% seK 464M % Margin 11% 10% 8% 8% KInneVIK sTaKe FaIr Value Net proft/loss 422 375 -109 251 Excludes discontinued operations. EBIT is excluding non-recurring items. 5.6M aCTIVe users
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q 2016 11
FInanCIal serVICes
Other
Betterment is the largest independent automated babylon launched in 2015 and is a pioneer in per- investing service company in the united states. Bet- sonal digital healthcare globally. Based in the uK, it terment’s vertically integrated platform provides fully has over 500,000 registered patients across the uK automated, personalized advice and access to a low- and Ireland, and a pilot in rwanda. cost, globally diversifed investment portfolio.
• Assets under management amounted to • At the end of 2016, babylon had over 500,000 USD 6.8bn at the end of 2016, an increase of over registered users and thousands of interactions per 100% compared to the end of 2015. Number of day, awarding the company sector-leading user customers totalled 208,000, a yearly increase of ratings over 60% • During the fourth quarter, babylon launched a • In early February 2017, Betterment expanded the chatbot interface to check symptoms and triage company’s platform beyond a single digital product patients more naturally, which has increased user to a multi-plan advice offering that now includes engagement human advice through a team of CFP® (Certifed • babylon also announced a partnership with NHS Financial Planner) professionals and licensed fnan- to power its urgent care line with babylon’s auto- cial experts mated triage for a test group of over one million • Betterment for Business, the company’s 401(k) solu- people tion, has now signed on more than 300 employer plans since it was launched in the beginning of 2016
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9% seK 590M 13% seK 154M KInneVIK sTaKe FaIr Value KInneVIK sTaKe FaIr Value 208 000 500 000 CusTOMers reGIsTered users
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q 2016 12
FInanCIal reVIew
Financial review dIVIdend and CaPITal sTruCTure InVesTMenT aCTIVITy As at 31 December 2016, Kinnevik was in a SEK 1.4bn net Oct-dec Fy Investee company (seKm) debt position. 2016 2016 During 2016, Kinnevik received cash dividends from Millicom, Tele2 898 898 Tele2 and MTG of SEK 1.7bn in aggregate, and paid out an Betterment - 538 ordinary cash dividend of SEK 2.1bn to its shareholders. During 2016, Kinnevik also executed a SEK 5.0bn mandatory Global Fashion Group - 1 503 share redemption program, and a SEK 500m share buyback Home24 - 27 program. Babylon 46 164 Linio - 115 For the fnancial year 2016, the Board of Directors of Millicom, Tele2 and MTG have recommended the following dividends: Westwing - 58 Other 27 96 Kinnevik’s part of dividend recommended to amount Investments 971 3 399 be paid from listed investee companies (seKm) Lazada - 415 Millicom USD 2.64 per share 887 1 Other 99 148 Tele2 SEK 5.23 per share 797 divestments 99 563 MTG SEK 12.00 per share 162
Total ordinary dividends 1 846 net investments 872 2 836
Kinnevik does not provide guidance in relation to its invest- recommended cash distribution to Kinnevik’s shareholders ment activities during 2017. Ordinary dividend SEK 8.00 per share 2 201 KInneVIK’s OrGanIsaTIOn 1 Based on a USD/SEK exchange rate of 8.88 On 7 December 2016, the Board of Directors announced reFIned FInanCIal TarGeTs that Lorenzo Grabau was leaving Kinnevik with immediate effect. Joakim Andersson was appointed acting CEO. A search Kinnevik has refned its fnancial targets relating to its targeted process for a new CEO is ongoing. shareholder return and leverage goal. The refned fnancial targets are: On 5 December 2016, Stina Andersson, Investment Director, left Kinnevik to join Tele2 as Executive Vice President Strategy Attractive Returns & Business Development. Kinnevik’s objective is to generate a long term total return to our shareholders in excess of our cost of capital. We aim to deliver an annual total shareholder return of 12-15% over the business cycle. Low Leverage Given the nature of Kinnevik’s investments, our goal is to carry low leverage, not exceeding 10% of portfolio value. Increasing Shareholder Remuneration Kinnevik aims to pay an annual dividend growing in line with dividends received from our investee companies and the cash fow generated from our investment activities. Kinnevik will make share buybacks when our shares trade at a signifcant discount to their intrinsic value, as perceived by Kinnevik, and the company has signifcant net cash (taking into consideration its dividend expectations, net investment plan and operating cost).
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q 2016 13
FInanCIal reVIew
ValuaTIOn OF unlIsTed asseTs
Change in fair value and dividends received
Kinnevik net invested Fair value Oct-dec Full year Investment (seKm) Valuation method ownership amount 31 dec 2016 2016 2016
Global Fashion Group 1, 2, 3 35% 5 658 5 641 -27 71 Revenue multiple
Home & Living
Home24 2 17% 833 94 -30 -734 Revenue multiple
Westwing 2 17% 419 429 - -16 Revenue multiple
Other Mixed 52 28 -1 -41 Mixed
Other E-Commerce
Lazada 4% 87 706 40 601 Latest transaction
Linio 2 27% 438 292 -67 42 Revenue multiple
Konga 3 34% 257 133 -10 7 Revenue multiple
Other 1 Mixed 182 149 -48 -106 Mixed
Marketplaces
Quikr 18% 879 1 535 -9 16 DCF
Saltside 61% 195 200 3 5 DCF
Other Mixed 223 20 -15 -306 Mixed Total e-Commerce & Marketplaces 9 222 9 227 -164 -461
Metro 100% 966 327 29 34 DCF
Other Mixed 128 112 -25 -41 Mixed Total entertainment 1 094 439 4 -7
Bayport 24% 467 1 201 69 -77 Latest transaction
Betterment 9% 538 590 33 52 Latest transaction
Milvik/BIMA 39% 213 464 38 113 DCF
Other Mixed 103 165 3 62 Mixed Total Financial services 1 321 2 420 143 150
Babylon 3 13% 164 154 1 -10 Latest transaction
Other Mixed 242 51 20 12 Mixed Total Other 406 205 21 2
Total unlisted assets 12 043 12 291 4 -316
1 Net invested amounts include SEK 1.0bn in share distributions received from Rocket Internet. 2 Ownership not adjusted for employee stock option plans and employee equity at subsidiary level. 3 Includes investments and change in fair value of shareholder loan.
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q 2016 14
FInanCIal reVIew
FaIr Values as aT 31 deCeMBer 2016 where third party products are sold on the companies’ plat- forms. Revenues from this model generally consist of the fees At the end of December, the fair value of Kinnevik’s unlisted charged third party merchants. To refect the ongoing shift in assets amounted to a total of SEK 12,291m, to be compared business model in the method of valuing Kinnevik’s sharehold- with an accumulated invested amount (net after dividends ing in each company, the average trading multiples of two received) of SEK 12,043m. Change in fair value and dividends different peer groups have been applied in proportion to the received amounted to SEK 4m in the fourth quarter, as speci- revenue contribution of each business model. The weighted fed in the table on the previous page. average multiple applied on the respective company’s latest As a consequence of Kinnevik’s investee companies adopting publicly available 12 months’ net revenue is 1.7x for Linio and different fnancing structures, such as liquidation preferences, 2.4x for Konga (0.5x and 1.0x, respectively, in relation to net the value of Kinnevik’s shareholding in an investee company merchandise value during the same period). may be higher or lower than implied by Kinnevik’s percent- age ownership stake. Liquidation preferences determine 31 dec 30 sep adjusted Company * * ** how proceeds from a liquidity event are allocated between 2016 2016 multiple shareholders and this allocation may become increasingly GFG 1.4 1.5 Yes complex as a company raises several funding rounds at dif- ferent valuations. An increase or decrease in the equity value Home24 0.8 0.8 Yes of an investee company where liquidation preferences apply Westwing 0.9 1.0 Yes may result in a disproportionate increase or decrease in the Linio 1.7 1.9 Yes fair value of Kinnevik’s shareholding in that investee company. Konga 2.4 2.5 No
GlOBal FashIOn GrOuP * Multiple of latest publicly available 12 months historical net revenues. ** Multiple has been adjusted as per 31 December 2016 to refect differences in fac- The valuation of Kinnevik’s shareholding in Global Fashion tors such as proftability and growth rate. See Note 4 for further details. Group has been based on an average multiple of 1.4x the company’s latest publicly available 12 months’ net revenues and net cash position as at 30 September 2016. The average MarKeTPlaCes multiple used in the valuation corresponds to a 38% discount to GFG’s listed and proftable developed market peers. The The valuation of Kinnevik’s shares in Quikr has been based fair value of Kinnevik’s aggregate shareholding in GFG im- on a discounted cash fow analysis. The valuation implies an plies a EUR 1.8bn valuation for 100% of the company’s fully equity value of USD 940m. diluted equity. FInanCIal serVICes On 26 April, Kinnevik committed to invest up to EUR 200m in a minimum EUR 300m internal capital increase in GFG The valuation of Kinnevik’s shares in Bayport has as in the by way of a joint underwriting with Rocket Internet. Due to previous quarter been based on the value implied by cash strong interest, the fnancing round’s fnal size amounted transactions made in secondary Bayport shares in February to EUR 330m, and Kinnevik’s fnal participation was scaled 2016 at a valuation of USD 547m. The size of the transactions, back to EUR 161m. After completion of the capital increase approximately 5% of the company’s diluted share capital at in the third quarter of 2016, Kinnevik holds 35% of the share that point in time, is considered suffciently large to be ap- capital in GFG. plied to Kinnevik’s entire shareholding in Bayport. For Kinnevik’s shares in Milvik/BIMA, the valuation as at e-COMMerCe 31 December 2016 has been based on a discounted cash Revenue multiple valuations have been applied for Kinne- fow analysis resulting in a value of Kinnevik’s 39% stake of vik’s shareholdings in the e-commerce companies listed in SEK 464m, or a fully diluted equity value of USD 131m. the table on the right-hand side. The valuations have in all Kinnevik’s shares in Betterment have been valued in line cases been based on the respective company’s latest publicly with the valuation applied in the USD 100m funding round available 12 months’ net revenues and net cash positions as announced in the frst quarter of 2016, corresponding to a at 30 September 2016. fully diluted equity value of USD 700m. The peer group’s average revenue multiple within the Home & Living category has been discounted downwards to 0.8x for Home24 and to 0.9x for Westwing when assessing the fair values of Kinnevik’s shareholding. The valuation of Kinnevik’s shareholding in Lazada has been based on the valuation implied by Kinnevik’s partial divest- ment which was completed during the second quarter. The valuation implies an equity value of USD 2.0bn. Kinnevik’s other general e-commerce investee companies, Linio and Konga, are continuing their shift from a purely inventory based business model into a marketplace model,
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q 2016 15
FInanCIal reVIew
FaIr Values and IMPlIed Values FrOM laTesT TransaCTIOns as aT 31 deCeMBer 2016
Valuation Implied value Fair value nature of Investment (seKm) in latest Kinnevik’s Kinnevik’s difference latest transaction transaction stake stake Global Fashion Group 9 888 3 212 5 641 -2 429 New share issue Home24 4 028 683 94 589 New share issue Westwing 4 824 817 429 388 New share issue Lazada 18 169 706 706 - Sale of shares Linio 1 432 305 292 13 New share issue Quikr 13 939 2 504 1 535 969 New share issue Saltside 1 029 626 200 426 New share issue Bayport 4 965 1 201 1 201 - Sale of shares Betterment 6 287 590 590 - New share issue BIMA 1 227 493 464 29 New share issue Iroko 608 111 111 - New share issue Other E-Commerce & Marketplaces - 1 053 330 723 Various Other Financial Services - 166 165 1 Various Other Entertainment - 328 328 - Various Other - 205 205 - Various Total 13 000 12 291 709
In a number of Kinnevik’s unlisted investee companies, shares As specifed in the table above, the total difference between have been issued or transacted at price levels that diverge Kinnevik’s pro rata share of the valuations implied by the from Kinnevik’s recognized assessed fair values. latest transactions and the fair values in Kinnevik’s accounts amounted to SEK 709m applied to Kinnevik’s shareholdings Newly issued shares may have preferential rights such as as at 31 December 2016, whereof Kinnevik’s E-Commerce higher preference over an investee company’s assets in the & Marketplaces portfolio represented SEK 679m. Excluding event of a liquidation or sale than Kinnevik’s shares have; Global Fashion Group, where Kinnevik’s assessed fair value may represent a small share of an investee company’s share exceeds the value implied by the EUR 330m funding round capital; and may be directed solely to existing shareholders. completed in the third quarter of 2016, the aggregate dif- Transactions in secondary shares may also represent a small ference amounted to SEK 3.1bn. share of an investee company’s share capital or otherwise not be refective of the value of an investee company as a whole. For further information about valuation principles and as- Therefore, Kinnevik does not necessarily consider these price sumptions, please see Note 4. levels as the most relevant base in assessing the fair values in Kinnevik’s accounts.
TOTal sharehOlder reTurn
14% 11% 16% -6%
Past 30 years Past 10 years Past 5 years Past 12 months
Total shareholder return is calculated on the basis of shareholders reinvesting all cash dividends, dividends in kind and mandatory share redemption proceeds into the Kinnevik share.
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q4 ∙ 2016 16
Financial statements For the group condensed consolidated income statement
restated 2016 restated 2015 2016 seK m note 1 oct- 2015 1 oct- Full year 31 Dec Full year 31 Dec Change in fair value of fnancial assets 4 -1 955 1 449 -4 969 -1 537
Dividends received 5 17 0 1 733 2 984
Administration costs -107 -100 -261 -245
Other operating income 7 10 47 21
Other operating expenses 0 2 -1 1
-2 038 1 361 -3 451 1 224
Financial net -43 7 -7 -14
-2 081 1 368 -3 458 1 210
Tax -1 -2 -1 -3
-2 082 1 366 -3 459 1 207
Net proft/loss per share before dilution -7.56 4.92 -12.55 4.35
Net proft/loss per share after dilution -7.56 4.93 -12.55 4.35
Cash fow hedging, gains/losses during the period 5 4 5 2
5 4 5 2
-2 077 1 370 -3 454 1 209
Outstanding shares at the end of the period 275 115 735 277 402 722 275 115 735 277 402 722
Average number of shares before dilution 275 115 735 277 396 796 275 570 219 277 380 851
Average number of shares after dilution 275 457 381 277 567 756 275 802 078 277 516 889
consoliDateD earnings For the F ourth quarter
The change in fair value of fnancial assets amounted to a loss of SEK 1,955m (proft of 1,449) for the fourth quarter of which a loss of SEK 1,942m (proft of 3,336) was related to listed holdings and a loss of SEK 13m (loss of 1,887) was related to unlisted holdings. See note 4 for further details. Administration costs includes a reservation of SEK 19m regarding termination costs for the former CEO which will be paid over 18 months.
consoliDateD earnings For the year
The change in fair value of fnancial assets including dividends received amounted to a loss of SEK 3,236m (proft of 1,447) for the year of which a loss of SEK 2,920m (loss of 508) was related to listed holdings and a loss of SEK 316m (proft of 1,955) was related to unlisted holdings. See note 4 for further details.
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q4 ∙ 2016 17
Financial statements For the group condensed consolidated
restated 2016 restated 2015 2016 seK m note 1 oct- 2015 1 oct- Full year 31 Dec Full year 31 Dec Dividends received 5 17 - 1 733 2 984
Cash fow from operations -80 -50 -250 -180
-63 -50 1 483 2 804
Interest, received 0 4 54 12
Interest, paid -11 -11 -41 -41
-74 -57 1 496 2 775
Investments in fnancial assets -971 -339 -3 330 -1 590
Sale of shares and other securities 16 7 496 480 8 259
Other 0 0 0 -10
-955 7 157 -2 850 6 659
Change in interest bearing loans 395 116 381 67
Repurchase of shares - - -500 -
Redemption program and dividend paid to equity holders of the Parent company - - -7 084 -2 011 395 116 -7 203 -1 944
-634 7 216 -8 557 7 490
957 1 664 8 880 1 390
323 8 880 323 8 880
supplementary cash FloW inFormation
Investments in fnancial assets 4 -971 -33 -3 399 -1 562
Current period investments, not yet paid - - 69 62
Prior period investments, paid in current period - -306 - -90
-971 -339 -3 330 -1 590
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q4 ∙ 2016 18
Financial statements For the group condensed consolidated
restated 2016 seK m note 2015 31 Dec 31 Dec
assets
Financial assets accounted at fair value through proft and loss 4 73 827 75 960
Tangible fxed assets 63 66
Other fxed assets 3 3
73 893 76 029
Other current assets 103 18
Short term investments 0 8 321
Cash and cash equivalents 323 559
total assets 74 319 84 927
shareholDers' equity anD liaBilities
Shareholders' equity attributable to equityholders of the Parent Company 72 434 83 464
Interest bearing liabilities, long term 41 1 259
Interest bearing liabilities, short term 1 600 1
Non interest bearing liabilities 244 203
total equity anD liaBilities 74 319 84 927
Key ratios
restated 2016 ratio note 2015 31 Dec 31 Dec
Debt/equity ratio 0.02 0.02
Equity ratio 97% 98%
Net cash/(Net debt) for the Group, including net loans to investee companies 6 -1 309 7 568
Leverage 2% -
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q4 ∙ 2016 19
Financial statements For the group
retained earnings non- hedging translation - including total controlling seK m capital ed capital net result interest
1 2014 28 40 -36 -1 75 345 84 176 30 84 206
Effect of changes in accounting principles 1 97 98 -30 68
1 201 28 40 -36 0 75 442 84 274 0 84 274
Other comprehensive income 2 2 0 2
Proft for the year 1 207 1 207 1 207
0 0 2 0 1 207 1 209 0 1 209
Effect of employee share saving programme -8 -8 -8
Cash dividend -2 011 -2 011 -2 011
1 201 28 8 840 -34 0 74 630 83 464 0 83 464
Other comprehensive income 5 5 5
Proft for the year -3 459 -3 459 -3 459
0 0 5 0 -3 459 -3 454 0 -3 454
Effect of employee share saving programme 8 8 8
Redemption program and cash dividend -7 084 -7 084 -7 084
Share buy-backs -1 -499 -500 -500
1 2016 27 8 840 -29 0 63 596 72 434 0 72 434
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q4 ∙ 2016 20
notes For the group
note 1 accounting principles
The consolidated fnancial statements are prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the EU. This report was prepared in accordance with the Annual Accounts Act and IAS 34, Interim Financial Reporting. Information in accordance with IAS 34, Interim Financial Reporting is provided in the notes as well as on other places in the interim report.
To make the fnancial statements for Kinnevik better refect the activities of the group, Kinnevik has, after an assessment, de- cided to apply Investment Entity accounting according to IFRS 10 . This means that the operating subsidiaries; Metro, Saltside , G3 and Vireo (divested in Q4 2016) , are valued at fair value through proft and loss instead of being consolidated from 1 January 2016. Comparative numbers for 2015 have been recalculated according to the new policy. The effect of the changes in the accounting principle are presented in the ”Statement of Changes in Equity” and in Note 7 ”Restatement of Financial Statements in respect of application of IFRS 10, Investment entities” in the interim report for the frst quarter 2016.
In all other aspects, the accounting principles and calculation methods applied in this report are the same as those described in the 2015 Annual Report.
Kinnevik believes that the Company meets the criteria to qualify as an investment entity and the following key considera- tions were observed in conjunction with the assessment: • Kinnevik receives capital from its shareholders in order to invest in portfolio companies that Kinnevik subsequently assists in developing in an effort to generate a return in the form of both a direct yield and value appreciation on the investment. Investments are made both in listed and unlisted companies. • Kinnevik continually monitors and evaluates its investments in portfolio companies on the basis of fair value. • Kinnevik currently focuses on investments in a number of different sectors. The company does not have an explicit time horizon as regards the scheduling of a divestment; instead, the investment strategy is assessed on a continual basis and the focus changes over time. note 2 risK management
The Group’s management of fnancial risks is centralized within Kinnevik’s fnance function and is conducted on the basis of a policy established by the Board of Directors. The Group’s operational risks are primarily evaluated and managed within the particular business area and then reported to the Kinnevik Board.
The Group has established a model for risk management, the aims of which are to identify, control and reduce risks. The identifed risks and how they are managed are reported to the Kinnevik Board on a regular basis.
Kinnevik is exposed to fnancial risks mainly in respect of changes in the value of the stock portfolio, changes in market inter- est rates, exchange rate risks, liquidity and refnancing risks and counterparty risks. Kinnevik is also exposed to political and other market and funding related risks since a number of the companies Kinnevik has invested in are early stage businesses and may have a substantial part of their operations in emerging markets such as Latin America, Sub-Saharan Africa, Russia and Eastern Europe.
For a more detailed description of the Company’s risks and risk management, refer to the Board of Directors’ report and Note 24 of the 2015 Annual Report. note 3 relateD party transactions
Related party transactions for the period are of the same character as the transactions described in the 2015 Annual Report.
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q4 ∙ 2016 21
notes For the group
note 4 Financial assets accounteD at Fair Value through proFit anD loss
Kinnevik’s unlisted holdings are valued using IFRS 13 and the International Private Equity and Venture Capital Valuation Guidelines, whereby a collective assessment is made to establish the valuation method that is most suitable for each individual holding. Firstly, it is considered whether any recent transactions have been made at arm’s length in the companies. For new share issues, consideration is taken to if the newly issued shares have preferential rights, such as senior liquidation prefer- ence to the company’s assets than earlier issued shares. For companies where no or few recent arm’s length transactions have been performed, a valuation is conducted either by applying relevant multiples to the company’s historical and forecast key fgures, such as sales, proft, equity, or by discounting future expected cash fows. When performing a valuation based on multiples, consideration is given to potential adjustments due to, for example, difference in size, historic growth, proftability and geographic market between the current company and the group of comparable companies.
The valuation process for Kinnevik’s unlisted holdings is run by the fnancial department and based on fnancial information reported from each holding. The correctness of the fnancial information received is ensured through continuous contacts with management of each holding, monthly reviews of the accounts, as well as internal audits performed by auditors engaged by Kinnevik. Prior to decisions being made about the valuation method to be applied for each holding, and the most suitable peers with which to compare the holding, the fnancial department obtains information and views from the investment team, as well as external sources of information. Information and opinions on applicable methods and groups of comparable com- panies are also obtained periodically from well-renowned, valuation companies in the market. The results from the valuation is discussed frstly with the CEO, following which a draft is sent to the Audit Committee, who each quarter analyze and discuss the outcome before it is approved at a meeting attended by the company’s external auditors.
Below is a summary of the valuation methods applied in the accounts as per 31 December 2016:
company Valuation assumptions The valuation is based on the average sales multiple of a group of comparable companies (Zalando, 12 months historical sales Global Asos and Yoox Net-a-Porter Group), adjusted with a 38% discount on an aggregated level to adjust for (ending 30 Sep 2016) Fashion emerging market exposure and path to proftability. Group Multiple: 1.4x The valuation considers preferential rights in case of a liquidation or sale of the company. The valuation is based on the average sales multiple of a group of comparable companies (including 12 months historical sales Ocado Group, Wayfair and AO World), adjusted with a 20% discount on an aggregated level to adjust (ending 30 Sep 2016) Home24 for growth and path to proftability. Multiple: 0.8x The valuation considers preferential rights in case of a liquidation or sale of the company.
The valuation is based on the average sales multiple of a group of comparable companies (includ- 12 months historical sales ing Ocado Group, Wayfair and AO World). The average sales multiple of the peer group has been (ending 30 Sep 2016) Westwing reduced by 10% due to factors such as lower proftability and company size. The valuation considers preferential rights in case of a liquidation or sale of the company. Multiple: 0.9x
The valaution is based on the sale of 4% of Kinnevik’s stake in the company. The valuation implies an Lazada equity value of USD 2.0bn.
The valuation is based on the average sales multiple of a group of comparable companies. Linio generates revenue from two business models, inventory and marketplace. Accordingly, two different peer groups are used in the valuation and the multiple weighted based on sales. The peer group for 12 months historical sales Linio the inventory model includes Amazon, Qliro Group, JD.com and AO World. The peer group for the (ending 30 Sep 2016) marketplace model includes MercadoLibre, eBay and Alibaba. This has then been adjusted by a 30% Multiple: 1.7x discount to adjust for factors such as path to proftability and emerging market exposure. The valuation considers preferential rights in case of a liquidation or sale of the company. The valuation is based on the average sales multiple of a group of comparable companies. Konga generates revenue from two business models, inventory and marketplace. Accordingly, two different 12 months historical sales peer groups are used in the valuation and the multiple weighted based on sales. The peer group for (ending 30 Sep 2016) Konga the inventory model includes Amazon, Qliro Group, JD.com and AO World. The peer group for the marketplace model includes MercadoLibre, eBay and Alibaba. Multiple: 2.4x The valuation considers preferential rights in case of a liquidation or sale of the company.
Quikr The valuation is based on discounted cash fows valuing Quikr at USD 940m.
The valuation is based on the latest transaction at arm’s length; secondary share transactions in Febru- Bayport ary 2016. The transaction valued all shares in Bayport at USD 547m.
Milvik/BIMA The valuation is based on discounted cash fows valuing BIMA at USD 131m.
The valuation is based on the latest funding round where Kinnevik invested USD 65m. The transaction Betterment valued all shares in Betterment at USD 700m on a fully diluted basis.
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q4 ∙ 2016 22
notes For the group
For the companies in the table above that are valued based on multiples (i.e. Global Fashion Group, Home24, Westwing, Linio and Konga), an increase in the multiple by 10% would have increased estimated fair value by SEK 326m. Similarly, a decrease in the multiple by 10% would have decreased estimated fair value by SEK 517m. When establishing the fair value of other fnancial instruments, methods that in every individual case are assumed to provide the best estimation of fair value have been used. For assets and liabilities maturing within one year, a nominal value adjusted for interest payments and premiums is assumed to provide a good approximation to fair value. Information is provided in this note per class of fnancial instruments that are valued at fair value in the balance sheet, distrib- uted in the levels stated below: Level 1: Fair value established based on listed prices in an active market for the same instrument. Level 2: Fair value established based on valuation techniques with observable market data, either directly (as a price) or indirectly (derived from a price) and not included in Level 1. Level 3: Fair value established using valuation techniques, with signifcant input from data that is not observable in the market.
restated 2016 2016 restated 2015 1 oct- Full year 2015 1 oct- 31 Dec Full year 31 Dec
Black Earth Farming 95 57 100 57
Millicom -2 066 -1 309 -3 689 -3 560
MTG 691 34 711 -420
Qliro Group -141 68 -147 -224
Rocket Internet -29 -218 -1 637 -4 993
Seamless -8 1 -7 -13
Tele2 262 488 -1 255 -1 342
Transcom - - - 89
Zalando -746 4 215 1 302 6 914
total listed assets -1 942 3 336 -4 623 -3 492
Avito - 70 - 4 859
Babylon 1 - -10 -
Bayport 69 -178 -77 246
Betterment 33 - 52 -
Global Fashion Group -27 -1 233 71 -2 696
Home24 -30 -18 -734 -44
Konga -10 -306 7 -189
Lazada 40 -12 601 -36
Linio 1 -67 -8 -90 -89
Milvik/BIMA 38 2 113 16
Quikr -9 8 16 577
Westwing - -87 -16 -178
Other 1 -51 -125 -279 -511
total unlisted assets -13 -1 887 -346 1 955
total -1 955 1 449 -4 969 -1 537
1 Comparable periods have been adjusted for the swap between Linio and Africa E-Commerce Holding.
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q4 ∙ 2016 23
notes For the group
1 2016
restated class a class B 2016 2015 31 Dec 31 Dec
Black Earth Farming 51 811 828 - 24.6/24.6 308 209
Millicom 37 835 438 - 37.7/37.7 14 790 18 479
MTG 4 461 691 9 042 165 20.3/48.0 3 650 2 938
Qliro Group 42 613 642 - 28.5/28.5 367 513
Rocket Internet 21 716 964 - 13.2/13.2 3 990 5 627
Seamless 3 526 334 - 6.0/6.0 20 35
Tele2 20 733 965 131 699 187 30.3/47.9 11 166 11 524 Zalando 78 427 800 - 31.7/31.7 27 245 25 943
total listed assets 61 536 65 268
Babylon 12.8/12.8 154 -
Bayport 24.2/24.2 1 201 1 278
Betterment 9.3/9.3 590 -
Global Fashion Group 35.4/35.4 5 641 4 067
Home24 17.0/17.0 94 801
Konga 34.0/34.0 133 103
Lazada 3.6/3.6 706 520
Linio 1 27.0/27.0 292 135
Milvik/BIMA 38.9/38.9 464 351
Quikr 18.0/18.0 1 535 1 519
Saltside 60.8/60.8 200 195
Westwing 16.5/16.5 429 387 Other 1 -/- 852 1 336
total unlisted assets 12 291 10 692
total 73 827 75 960
1 Comparable periods have been adjusted for the swap between Linio and Africa E-Commerce Holding.
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q4 ∙ 2016 24
notes For the group
restated 2016 restated 2015 2016 1 oct- 2015 1 oct- Full year 31 Dec Full year 31 Dec
Tele2 898 - 898 -
total listed assets 898 - 898 -
Babylon 46 - 164 - Betterment - - 538 -
Global Fashion Group - - 1 503 555
Home24 - - 27 12
Iroko - - 17 15
Konga 10 - 23 -
Linio 1 - 17 115 41
Metro - - - 35
Milvik/BIMA - - - 129
Quikr - - - 517
Saltside - - - 41
Westwing - - 58 186
Other 17 16 56 31
total unlisted assets 73 33 2 501 1 562
total 971 33 3 399 1 562
1 Comparable periods have been adjusted for the swap between Linio and Africa E-Commerce Holding (“Jumia”).
restated 2016 restated 2015 2016 1 oct- 2015 1 oct- Full year 31 Dec Full year 31 Dec
Opening balance 12 330 20 139 10 692 14 853
Investments 73 33 2 501 1 562
Disposals / Exit proceeds -99 -7 593 -556 -7 678
Change in fair value -13 -1 887 -346 1 955
12 291 10 692 12 291 10 692 note 5 DiViDenDs receiVeD
restated 2016 restated 2015 2016 1 oct- 2015 1 oct- Full year 31 Dec Full year 31 Dec
Millicom - - 823 823
Tele2 - - 725 2 012
MTG - - 155 149 Other 17 - 30 -
17 - 1 733 2 984
Of which cash dividends 17 - 1 733 2 984
Of which ordinary cash dividends - - 1 703 1 629
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q4 ∙ 2016 25
notes For the group
note 6 interest Bearing assets anD liaBilities
Kinnevik’s total interest bearing assets amounted to SEK 413m as at 31 December 2016. The total amount of interest bearing liabilities was SEK 1,673m and the net debt for unpaid investments/divestments was SEK 49m. Kinnevik was in a net debt position of SEK 1,367m as at 31 December 2016 (net cash SEK 7,558m as at 31 December 2015). Including net oustanding loans to investee companies, the corresponding fgure was SEK 1,309m (SEK 7,568m as at 31 December 2015).
Kinnevik’s total credit facilities (including issued bonds) amounted to SEK 7,330m as at 31 December 2016 whereof SEK 6,000m related to revolving credit facilities and SEK 1,200m related to bonds. The total amount of outstanding loans was SEK 1,600m, of which SEK 400m in issued commercial papers.
The Group’s available liquidity, including short term investments and available unutilized credit facilities, totaled SEK 6,053m as at 31 December 2016 (SEK 14,810m as at 31 December 2015).
restated 2016 seKm 2015 31 Dec 31 Dec
Loans to investee companies 91 10
Short term investments - 8 321
Cash and cash equivalents 323 559
413 8 890
Debt to investee companies 32 -
Liabilities to credit institutions 21 34
Capital markets issues 0 1 200
Accrued borrowing cost -12 -8
Other interest bearing liabilities 31 33
73 1 259
Liabilities to credit institutions 0 1
Capital markets issues 1 200 -
Commercial papers 400 -
1 600 1 1 673 1 260
Net interest bearing liabilibties (-) / assets (+) -1 260 7 630
Debt, unpaid investments/divestments -49 -62
-1 309 7 568
The outstanding loans carry an interest rate of Stibor or similar base rate with an average margin of 1.3%. All bank loans have variable interest rates (up to 3 months) while fnancing from the capital markets vary between 1 to 12 months for the loans under the commercial paper program and 5 years fxed for the outstanding bond (as per date of issue).
As at 31 December 2016, the average remaining tenor was 2.7 years for all credit facilities including the bond. As at 31 De- cember 2016, Kinnevik had not provided any security for any of its outstanding loans.
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q4 ∙ 2016 26
Financial statements For the parent company condensed parent company income statement
restated 2016 restated 2015 2016 seK m 1 oct- 2015 1 oct- Full year 31 Dec Full year 31 Dec
Administration costs -110 -95 -245 -229
Other operating income and costs 2 2 7 7
operating loss -108 -93 -238 -222
Dividends received, external 0 0 786 1 973
Result from subsidiaries -2 592 -4 487 -3 431 8 605
Financial net -16 -6 -45 -41
-2 716 -4 586 -2 928 10 315
Group contribution 100 31 100 31
-2 616 -4 555 -2 828 10 346
Taxes 0 0 0 0
-2 616 -4 555 -2 828 10 346
-2 616 -4 555 -2 828 10 346
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q4 ∙ 2016 27
Financial statements For the parent company condensed parent company
2016 2015 seK m 31 Dec 31 Dec
assets
Tangible fxed assets 4 4
Financial fxed assets 51 960 54 278
Short term receivables 121 83
Short term investments 0 8 337
Cash and cash equivalents 317 345
total assets 52 402 63 047
Q
Equity 42 108 52 513
Provisions 27 28
Long term interest bearing liabilities 6 605 10 370
Short term liabilities 3 662 136
Q 52 402 63 047
The Parent Company’s liquidity, including short-term investments and unutilized credit facilities, totalled SEK 6,447m (14,612) at 31 December 2016. The Parent Company’s interest bearing external liabilities amounted to SEK 1,627m (1,225) on the same dates. Investments in tangible fxed assets amounted to SEK 0m (1) during the period.
Distribution by class of shares on 31 December 2016 was as follow:
000
Outstanding Class A shares, 10 votes each 41 157 144 411 571 440 4 116 Outstanding Class B shares, 1 vote each 233 958 591 233 958 591 23 396 Class B shares in own custody 350 903 350 903 35 275 466 638 645 880 934 27 547
The total number of votes for outstanding shares in the Company amounted at 31 December 2016 to 645,880,934 excluding 350,903 class B treasury shares. During the second quarter 14,565 Class B shares were delivered to participants in the long term incentive program 2013. A share repurchase program was executed between 15 February and 23 March 2016. The number of shares bought back amounted to 2,301,552 Class B shares.
The AGM on 23 May 2016 resolved (i) on a reduction of the share capital by way of cancellation of the 2,301,552 class B shares repurchased under Kinnevik’s share repurchase program, (ii) to authorize the Board to resolve on a new issue of class C shares to ensure delivery of shares to participants in Kinnevik’s long-term incentive plan 2016, and (iii) to offer holders of class A shares to reclassify their Class A shares into Class B shares. This offer was effected during 22 June to 4 July and shareholders of 1,212,168 Class A shares choose to reclassify their Class A shares to Class B shares.
The reclassifcation of shares from Class A to Class B and the cancellation of the repurchased shares was executed and reg- istered in July 2016.
The Board has authorization to repurchase up to a maximum of 10% of all shares in the Company over 12 months, ending at the AGM of 2017.
There are no convertibles or warrants in issue.
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q4 ∙ 2016 28
Financial statements For the parent company
DeFinitions oF alternatiVe perFormance measures
Kinnevik presents some performance measures in the interim report that are not defned by IFRS. Kinnevik believes that these performance measures adds valuable information to the company’s investors and the company’s management since they enable assessment of the Kinnevik’s and its portfolio companies performance and position. Since all companies do not calculate their performance measures in the same manner, these are not always comparable with similar measures used by other companies. Such performance measures shall therefore not be used in replacement of measures defned by IFRS.
Alternative performance measures in Kinnevik’s interim report include: Active customers Number of customers having made at least one order within the last 12 months Debt/equity ratio Interest-bearing liabilities including interest-bearing provisions divided by share holders’ equity Equity ratio Shareholders’ equity including non-controlling interest as percentage of total assets Gross merchandise value, GMV Total value of all sale transactions during the period, including taxes but excluding ship- ping costs Internal rate of return, IRR The annual rate of return calculated in quarterly intervals on a SEK basis that renders a zero net present value of (i) fair values at the beginning and end of the respective meas- urement period, (ii) investments and divestments, and (iii) cash dividends and dividends in kind Investments All investments in listed and unlisted fnancial assets, including loans to portfolio com- panies Leverage Net debt as a percentage of portfolio value Net asset value, NAV Net value of all assets on the balance sheet, equal to the shareholders’ equity Net cash/(net debt) Interest bearing receivables (excluding net oustanding receivables relating to portfolio companies), short-term investments and cash and cash equivalents less interest-bearing liabilities including interest-bearing provisions and unpaid investments/divestments Net investments The net of all investments and divestments in listed and unlisted fnancial assets Net merchandise value, NMV Gross merchandise value after actual and provisioned returns and rejections Portfolio value Value of all assets on the balance sheet, less cash and cash equivalents Total shareholder return, TSR Annualized total return of the Kinnevik B share on the basis of shareholders reinvesting all cash dividends, dividends in kind, and mandatory share redemption proceeds into the Kinnevik B share, before tax, on each respective ex-dividend date. The value of Kinnevik B shares held at the end of the measurement period is divided by the price of the Kinnevik B share at the beginning of the period, and the resulting total return is then recalculated as an annual rate
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com Q4 ∙ 2016 29
201 reVieW report
The Annual General Meeting will be held on 8 May 2017 in introduction Stockholm. Shareholders wishing to have matters considered We have reviewed the interim report for Kinnevik AB for the at the Annual General Meeting should submit their proposals period 1 January - 31 December, 2016. The Board of Directors in writing to [email protected] or to The Company Secretary, and the Chief Executive Offcer are responsible for the prepara- Kinnevik AB, Box 2094, SE-103 13 Stockholm, Sweden, at least tion and presentation of this interim report in accordance with seven weeks before the Annual General Meeting, in order that IAS 34 and the Annual Accounts Act. Our responsibility is to the proposal may be included in the notice to the meeting. express a conclusion on this interim report based on our review. Further details on how and when to register will be published in advance of the Meeting. We conducted our review in accordance with the International Standard on Review Engagements (ISRE) 2410, Review of nomination committee aheaD oF Interim Financial Information Performed by the Independent the 2017 annual general meeting Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for fnancial and accounting In accordance with the resolution of the 2016 Annual General matters, and applying analytical and other review procedures. Meeting in Kinnevik, Cristina Stenbeck has convened a Nomi- A review has a different focus and is substantially less in scope nation Committee comprising representatives of Kinnevik’s than an audit conducted in accordance with ISA and other gen- largest shareholders in terms of voting interest. The Nomination erally accepted auditing practices. The procedures performed Committee comprises Cristina Stenbeck representing Verdere in a review do not enable us to obtain a level of assurance that S.à r.l., Wilhelm Klingspor representing the Klingspor family, would make us aware of all signifcant matters that might be Edvard von Horn representing the von Horn family, James identifed in an audit. Therefore, the conclusion expressed Anderson representing Baillie Gifford, and Ramsay Brufer based on a review does not give the same level of assurance representing Alecta. as a conclusion expressed based on an audit. Information about the work of the Nomination Committee can conclusion be found on Kinnevik’s corporate website at www.kinnevik.com. Based on our review, nothing has come to our attention that causes us to believe that the interim report is not, in all material Financial reports respects, prepared for the Group in accordance with IAS 34 and the Annual Accounts Act, and for the Parent Company in Kinnevik’s Annual Report 2016 will be published on Kinnevik’s accordance with the Annual Accounts Act. website on 31 March 2017. Dates for 2017 reporting: Stockholm 10 February 2017 27 April Interim Report January-March 2017 21 July Interim Report January-June 2017 Deloitte AB 26 October Interim Report January-September 2017 Jan Berntsson Authorized Public Accountant Stockholm 10 February 2017
The Board of Directors
This information is information that Kinnevik AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out below, at 08.00 CET on 10 February 2017.
For further information, visit www.kinnevik.com or contact:
Torun Litzén Director Investor Relations Phone +46 (0)8 562 000 83 Mobile +46 (0)70 762 00 83
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KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com